Beware Ohio Wholesalers - ODC Indicates It Will Prosecute

The legality of wholesaling is a much-debated topic. I'll save my own opinion for another post, because this one is about recent signals from Ohio Department of Commerce, Division of Real Estate.

The Division publishes a quarterly newsletter about real estate licensing topics, which also includes a list of disciplinary actions taken by the ODC and the Ohio Real Estate Commission. In the Spring, 2014 issue, an article appears on page 6, entitled "BEWARE: Seminars That Teach Unlicensed Real Estate Activity." Below is an excerpt from the article:

"Beware of seminars that provide instructions on wholesaling and option purchase contracts. Language included in these schemes include: “tying up the real property,” putting the house in contract until a buyer is found, and placing the home in contract for the purpose of re-selling the property. Despite what is being taught at these seminars, a real estate license is required to engage in these activities."

The division goes on to warn licensed brokers that they may be on the hook for discipline if they permit wholesaling activity.

"R.C. 4735.18(A) (34) provides that discipline may be imposed on a licensed real estate broker or salesperson for authorizing or permitting a person to act as an agent in the capacity of a broker or salesperson who was not then licensed as a real estate broker or salesperson. Steer clear of any individual, group, organization or otherwise that is promoting unlicensed activity...."

We've read indications on this forum here and elsewhere that Ohio has been recently going after wholesaling with a more aggressive stance. If you're a wholesaler in Ohio, be careful. If an upset buyer, seller or broker decides to file a complaint against you with the ODC, you might be on the hook to explain your activity or face a $1,000 per day fine.